Brokers implore government to 'create more stamp duty relief'

by Mackenzie McCarty11 Jan 2013

Stamp duty relief has been revealed as the key factor to help the housing industry rebound from near historic lows in 2013, a national survey has found - and mortgage brokers are ‘well placed’ to offer the latest news on stamp duty and home owner grants to their clients.

The survey, conducted by aggregator Loan Market, asked what action can the government take to stimulate the housing market in 2013’  and says the majority (55%) of respondents cited stamp duty relief as the key to a strong 2013 for the housing industry.

Loan Market corporate spokesperson, Paul Smith, says the survey of the company’s 450 Australian mortgage brokers shows that while stamp duty charges differ from state-to-state, the tax is a considerable obstacle for consumers looking to purchase an established home - especially for the second time.

“Stamp duty serves as an important source of revenue for state-based governments looking to create balanced budgets, but in many cases this tax can erode a significant chunk of a home buyer’s savings and sway their buying intentions. What stamp duty often does to consumers is reduce their deposit level so that they end up in lenders mortgage insurance (LMI) territory and have to pay an additional cost to establish the loan.”

Smith says most lenders don’t charge LMI if you have a deposit of at least 20% of the property price. However, in many cases, stamp duty charges are reducing deposit sizes so that the consumer must pay the insurance that protects the lender if the client defaults on their loan.

He says that a range of stamp duty concessions are available for consumers who are purchasing their first home, building or significantly upgrading an existing dwelling.

“In every state, first home buyers have some type of concession that helps them avoid this cost, however for those looking to purchase their second home or an investment property this is an unavoidable cost.

With the RBA interest rate reductions in 2012 having a minimal impact on the housing industry, Smith says it may be necessary for state-level governments to look at making further concessions to Stamp Duty charges.  

“Changes to grants and concessions do not happen overnight so it’s best to be well researched on what policies are being discussed. If you act at the right time, you can save a significant amount of money that can allow you to pay you home off faster.”

While ‘create more stamp duty relief’ proved to be the most popular response to the above question, a further 32% said the government should ‘reintroduce or amend state level grants’ while 10% asked for property taxes to be lowered and 3% called for the government to release more land for home construction.




  • by Patrick 11/01/2013 9:10:30 AM

    Ad Valorem Stamp Duty is a very unfair tax as it only impacts only on people changing homes. Some may do this many times in a lifetime, paying stamp duty on every purchase along the way, others may purchase a home and live there for the rest of their lives, paying stamp duty only once, or if an eligible first home buyer at the time, never at all. Stamp Duty along with all other state taxes was meant to be replaced by GST. Thanks to the narrow minded Democrats this was compromised by the GST exemptions. It is extemely difficult to know if we benefited as a whole due to the state taxes consequently retained, but even if we did the benefit is distorted. An alternative would be to adjust the land tax duty level appropriately and remove the principal residence exemption so that all property owners pay a proportional annual tax. A phase in could allow taxpayers who have recently purchased a land tax exemption for up to 5 years from the date of their purchase.

  • by Gavin R. Putland 10/02/2013 1:31:05 AM

    If you're a home owner, you don't have to pay stamp duty just because you change your address. If you put tenants in your former home and rent your new address, there's no change of ownership, so you pay no stamp duty, no conveyancing fees, and no commission on any sale. And you become eligible for the “negative gearing” deduction on your old address.

    “But,” you ask, “won't I start paying land tax and rental management fees?” Probably; but that's all income-tax-deductible too — unlike stamp duty, conveyancing fees, and commission on the sale of a principal residence.

    “But,” you ask further, “if I live away from my property for long enough, won't I have to pay capital gains tax?” Only if you actually make a capital gain! No such safeguard applies to stamp duty, conveyancing fees or agents' commissions.

    Of course, if everyone adopts this strategy for avoiding stamp duty, governments will be forced to change the rules; but early adopters will save a fortune in the mean time.